How is Air NZ (NZX:AIR) sustaining amid COVID-19 lockdown?


  • Air NZ has projected the impact of different alert levels on the financial performance of the Company.
  • The Group reported a 48% drop in its operating revenue in FY21 to $2.5 billion.
  • Air NZ’s earnings and cash flow guidance remain deferred.

Air New Zealand Limited (NZX:AIR) is an Auckland-based domestic and international passenger and cargo services provider in NZ.

The airline provided a trading update on 17 September that revealed the impact of the national lockdown in NZ and the suspension of trans-Tasman quarantine-free travel on AIR’s financial performance.

Image source: © 2021 Kalkine Media New Zealand Ltd

The Company’s projected impact of the lockdown and related restrictions on its financial performance are as follows-

  • NZ at alert level 3 or 4, travel limitations can result in a monthly impact of nearly $45 million to $55 million, which also includes the advantage of any wage subsidies received.
  • Auckland-only Level 3 or 4 travel restrictions with the rest of NZ at level 1 or 2 can result in a monthly impact of nearly $25 million to $35 million, including wage subsidy benefit.
  • Suspension of NZ-to-Australia travel can result in a monthly impact of nearly $20 million to $25 million.

The national carrier remains doubtful on the duration of these alert levels, trans-Tasman travel curbs, associated restrictions, and the way demand will bounce back once these curbs are lifted.

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AIR’s cargo flights continue to operate with about 50 flights per week while the carrier’s demand for air travel stays strong across NZ regions under Alert level 2.

Air NZ is also seeing a drop in operating cash with planned aircraft-related cash payments ahead, resulting in a further drawdown on the government loan facility. Extra drawdowns on the facility, including those drawings, would equal $435 million.


FY21 performance

Air NZ witnessed a 48% decline in its operating revenue to $2.5 billion in FY21 due to border restrictions with international flying capacity down by 55% on previous year.

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However, airfreight support measures resulted in a 77% rise in cargo flying revenue. The Group’s domestic business also performed strongly, leading to a strong leisure demand with corporate customers flying at levels before the coronavirus spread.

The airline also deferred its planned capital raising from 30 September 2021 until Q1 of 2022 amid an uncertain environment.


Air NZ’s earnings guidance for 2022 remain suspended due to uncertainty on lockdown, international travel restrictions and demand recovery as restrictions get lifted.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)



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